MARKET WATCHCrude futures price hits new record high

Crude futures prices hit a new 21-year record high Friday, spurred by the financial problems of OAO Yukos, Russia's largest oil company.

Aug. 2, 2004

2 min read

By OGJ editors

HOUSTON, Aug. 2 -- Crude futures prices hit a new 21-year record high Friday, spurred by the financial problems of OAO Yukos, Russia's largest oil company.

Russian bailiffs last week ordered Yukos to stop sales from certain production units as part of a court-ordered assets freeze. Although Russian government officials said they had no intention to disrupt Yukos's production, traders fear that the company will have to shut down operations, creating a deficit of 1.7 million b/d in an already tight supply situation.

Meanwhile, Iraqi Oil Minister Thamer al-Ghadhban said over the weekend that it would take Iraq 4 years to increase its oil production to 4 million b/d. "We have now a production capacity of 2.8 million b/d; we need to spend a lot of money . . . and a time span of 4 years from now in order to produce 4 million b/d," he said in the Sunday edition of the state-run Al-Sabah newspaper.

Iraq currently is producing 2.6 million b/d and exporting 1.7 million b/d through its southern terminals. Iraq is unable to export more oil via its northern outlet through the port of Ceyhan, Turkey, because of sabotage of that pipeline.

Energy prices
The September contract for benchmark US light, sweet crudes jumped by $1.05 to a record closing of $43.80/bbl Friday after trading as high as $43.85/bbl earlier in that same session on the New York Mercantile Exchange. It marked the second record-high price in three sessions. The October contract was up by 92¢ to $43.05/bbl Friday. On the US spot market, West Texas Intermediate at Cushing, Okla., tracked the near-month NYMEX performance, soaring by $1.05 to $43.80/bbl.

Prices for the expiring August contracts for petroleum products also increased, adding to the volatility. Gasoline for August delivery escalated by 2.43¢ to $1.2995/gal. Heating oil for the same month rose by 2.4¢ to $1.1568/gal. However, the September natural gas contract fell by 6.8¢ to $6.11/Mcf.

In London, the September contract for North Sea Brent crude increased by 78¢ to $40.03/bbl Friday on the International Petroleum Exchange. Gas oil for August delivery was up by $6 to $370.25/tonne. The September natural gas contract inched up by 0.19¢ to the equivalent of $3.87/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 75¢ to $38.69/bbl Friday. So far this year, OPEC's basket price has averaged $33.08/bbl.